Blendle Grabs $3.8M To Expand Its ‘Spotify For Journalism’

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Dutch startup Blendle, which is applying a Netflix style marketplace model to journalism, allowing web users of its website to buy individual articles from a range of publishers and publications for a few cents a pop, has pulled in a €3 million ($3.8M) Series A investment from the digital investment arm of European publishing giant Axel Springer, Axel Springer Digital Ventures, and the New York Times Company.

It plans to use the funding to expand the model to additional markets in Europe — to be determined by how receptive national publishers are to its model. Ultimately its pitch is to be a discovery engine for their content, as well as an additional pay-per-article revenue stream on top of their own digital subscriptions (which it does not compete with).

“We are now actively pursuing publishers in other countries in Europe to make sure that we get into contact with them and trying to get them on board to sell their content on Blendle,” says co-founder Alexander Klöpping. “We’re now talking to a lot of publishers in Germany. We get approached by a lot of publishers in Germany asking when we’re going to launch here.

“If we have a critical mass in a country — whether that’s Germany or France or Spain or wherever — whenever we get critical mass we’ll decide to launch in that country, because we believe that Blendle is only interesting for people in a country if 50%, 60%, 70% of the newspapers and magazines in that country are actually available. We need a completeness. Our users expect that of us.”

“We think it’s quite important to expand pretty quickly to other countries,” he adds, when asked about the timing of the Series A round. “We’re dealing with quite low margins. We get just 30% of all the articles that we sell. That means that we need to sell a whole lot of articles to make Blendle really profitable.”

Blendle’s mission is one any journalist at least can immediately get behind: it wants to make the business of news writing sustainable online where digital advertising revenues have not yet generally proved to be a like-for-like replacement for print sales businesses.

The startup was founded two years ago by two former journalists frustrated by the difficulties of accessing articles online in their native Netherlands, where many publishers were not publishing content online — for fear of the impact on their businesses.

“It’s just so amazing to us that it’s so annoying to buy journalism, to register at all these different websites. If you want to buy an app on your iPhone it’s just two clicks. But if you want to read an article on the Wall Street Journal you need to fill out a form,” says Klöpping.

People are spending money for the first time in their lives on journalism.

“When you think of the importance of journalism, and if you think of how much we just love the profession, to us it just felt so amazing. And at some point we noticed the solution is not going to come from the publishers’ themselves because they are way too focused on subscription models and more of the models that they’re used to. We really have a different vision of how people should pay for journalism.”

Two years of knocking on publishers’ doors and working with them to fashion Blendle followed and the result has been interest from big publishers from far afield, such as the NYT — not just within Europe. The startup launched its service this April in the Netherlands and now has more than 130,000 registered users. Individual articles can be bought for a price that’s set by the publisher — around 10 euro cents to 30 euro cents for news articles, or up to 80 euro cents for longer magazine articles, according to Klöpping. Blendle then does a 30:70 revenue share with publishers on any sales.

“The content that’s not available online is working very well in Blendle, especially in non-English speaking countries,” he says. “There most often, the quality of the journalism that’s available for free online isn’t that great, and the newspapers and magazines have all the quality — they own the journalistic quality… That stuff works really, really well on Blendle. People are paying money for that.

“When I look at the age of our users they’re really young. That very often means that people are spending money for the first time in their lives on journalism. Like they probably are right now on Spotify and Netflix. They’re paying for journalism right now and that makes me very excited.”

While the Blendle model may not be replicable everywhere, given that its most immediately suited to non-English speaking markets where journalism has generally been more gated than it has in, for instance, the U.K. or U.S. market where more publishers have put content online for free, Klöpping still sees potential for its marketplace model to lessen the frustration of paywalls and offer the convenience of a central wallet. Users top up their Blendle account with a set amount — say €10 or €20 — and can then spend it as they please, buying articles from multiple publications, and having an auto-top-up feature replenish their funds when they run out (if they wish).

“For us the single sign-on and one wallet approach is very, very important to what we do,” he says. “Even for the U.K. I think a lot of people are annoyed by how hard it is to read articles from big newspapers and magazines, from really anywhere in the world… Also in the U.K. you see paywalls getting stricter. The FT, for example, they used to give 10 articles away for free. Now it’s just three. And it’s going to be less and less, I believe, everywhere with publishers because when you make the meter too high there’s not big enough of an incentive to actually take a subscription. And the conversion percentage from a metered paywall like that is very low. So there’s still a problem.”

“We’ve now shown in Holland, even with newspapers that put their content online also, that we can get better conversion than they can on their own,” he adds. “So I think it will be pretty applicable to other countries too. Even the U.S. and the U.K.”

One key feature of Blendle is a refund option whereby readers can get a refund on any article they buy — with only a requirement that they specify the reason why they want their money back to get the refund. Klöpping says the rate of refunds is very low (around 3%). And worries of users just copy pasting content then asking for a refund are combated by including an upfront ‘I copy/pasted the article’ as one of the explanations in the list of refund request reasons to implicitly shame those who might be inclined to do that. Blendle can also monitor whether users are copy pasting to prevent systematic abuse.

“We’re just letting the user know, you know we’re seeing what you’re doing so just don’t do that too often,” he says, adding: “In the end people are happy to pay if it’s easy enough. That’s the main thing about Blendle, if you make it easy enough to pay for stuff people will pay for stuff. And then if you approach the user with trust and friendliness… it really does work.”

Another user-friendly feature is a capping process that means readers’ spending on articles from an individual publication is capped if it reaches the cover cost of the publication. If they are also found to be spending at a monthly subscription level rate they are pushed to register with the publisher (at this point Blendle takes a conversion fee that’s far lower than the 70:30 per article split).

The article preference data Blendle is building up on individual users will be used to power personalized recommendations in future. Currently recommendations for next reads are based on the user’s friends/people they follow but that’s going to get smarter as the business evolves, says Klöpping.

“I really want to make it completely logical for a user,” he says. “Right now we don’t push that article automatically to you based on an algorithm and that’s something we’re working on. Making sure we understand what kind of magazines and newspapers you like and making sure we understand what kind of topics you like and start to push that automatically to that user.”

So what are Blendle users reading? Not populist clickbait, apparently. “Really what we have been seeing is that the articles that are very special, the longer articles, analysis, columns, research pieces, really the longer, quality content that’s the stuff that does really, really well on Blendle,” he says.

Convincing publishers to add their content to this brave new world is of course critical to Blendle’s business. It’s the key challenge to scaling and sustaining this startup — and why Klöpping is keen to discuss how this marketplace can help publishers with scaling their own businesses through discovery and expanding their reader bases by getting their content in front of new eyeballs.

“Very often subscriptions are taken by people who were never reading that magazine or newspaper before or didn’t know the magazine — but [discovering the content on Blendle] was the final push to get them to a subscription,” he says, adding: “We’re at the forefront of trying to convince publishers to use more monetization methods like this, and I think we can be a great partner in figuring out how we can do Spotify for journalism. But the publishers have to be ready.”

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Crunchbase

OverviewBlendle is basically an iTunes for Dutch newspapers, an app and a website where readers can buy articles for €0.10 to €0.30 (13¢ to 38¢) a pop.
Blendle sells articles from most of the major Dutch papers, as well as from some Belgian publishers, and magazines that include the Economist. Readers can scan the major front pages and a handful of recommendations for individual articles from staffers …